Question

Caribbean Tours' total payroll for the month of January was $420,000. The following withholdings, fringe benefits, and payroll taxes apply: Federal and state income tax withheld $ 42,000 Health insurance premiums paid by employer (payable to Blue Cross) 7,560 Contribution to retirement plan paid by employer (payable to Fidelity) 16,800 FICA tax rate (Social Security and Medicare) 7.65 % Federal and state unemployment tax rate 6.20 % Assume that none of the withholdings or payroll taxes has been paid by the end of January (record them as payables), and no employee's cumulative wages exceed the relevant wage bases. Required: 1. Record the employee salary expense, withholdings, and salaries payable. 2. Record the employer-provided fringe benefits. 3. Record the employer payroll taxes.

Answer 1

Date	General Journal	Debit	Credit
January 31	Salaries expense	420000
	Income tax payable		42000
	FICA tax payable		32130	=420000*7.65%
	Salaries payable		345870
January 31	Salaries expense	24360
	Accounts Payable (Blue Cross)		7560
	Accounts Payable (Fidelity)		16800
January 31	Payroll tax expense	58170
	FICA tax payable		32130
	Unemployment tax payable		26040	=420000*6.2%